Economy And Traditional Economic Systems

A system is a set routines designed to achieve certain goals or duties. An economy is a system used by a state or country to careful manages their resources and monitors the supply of money, trading and production methods of goods and services. They are 4 main economic systems which are the Traditional system, Command economy, Market economy and Mixed economy.

Traditional system

The oldest economic system is called Traditional system. It is slow to adapt to changing conditions and stubbornly refrains from innovation. The goods and services in this economy are produced and distributed in the same way by each consecutive generation. This system does not put its economic activities as first priority often resulting in little economic growth.Economic activities are usually secondary to religious, cultural values and the aspiration to continue their present state. Nowadays, an authentic traditional systems is very scarce and can often be found in rural regions with high levels of subsistence farming where communities rely on the food they produce. Countries that evolve their economies past the traditional level often develop into market economies or command economies.http://www.investorwords.com/6709/traditional_economy.html#ixzz30rcFjUrO

The success of an economy is determined by its financial stability. In traditional economy, resources are distributed by inheritance. The advantage is that it only goods that are important and needed for survival are produced. However,the disadvantage is that it resist change as people will think that concepts passed on from previous generations will always be right.www.letslearnfinance.com

Command economy

A command economy is where economic decisions are planned out in detail by a central go...

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... them and when to stop doing them. This blocks the needs of the people and renders their personal growth and ambitions. This leads to formation black market and the buying and selling of good the command system isn’t producing. The more control authorities impose on the people the more they will lose their support.Command economy does not encourage or focus on innovation. Businesses are focused on what they are instructed to do and are discouraged from making any autonomous decisions.

Cuba, North Korea, China, Russia and Iran are the most commonly referenced examples of command economies. Russia's Gosplan has been the most studied. It was also the longest running, lasting from the 1930s until the late 1980s. (Source: Richard Erickson and Barry Ickes, Review of Economic Design, "A Model of Russia's Virtual Economy", 2001, 6, 185-214.) Article updated April 17, 2014